Additional Threat Intelligence

Oil Theft

Information and statistics about oil theft and oil smuggling. Data about the black market in stolen petroleum is collected from published intelligence reports, security agencies and other public information sources.

Fuel smugglers in Indonesia are using motorcycles to smuggled subsidized fuel into East Timor, which does not receive government subsidies for its gasoline purchases.

According to a report in the Jakarta Globe, smugglers quickly drive up to gas stations located in the Belu district of Timor. The smugglers cut in front of the line and fill up modified tanks on their bikes that are able to hold more fuel than regular motorcycle tanks. Once filled, they drive over the border into East Timor to sell the fuel on the black market. Once the fuel is off-loaded, the smugglers return to the gas station in Belu and repeat the process. Media reports state that each time the smuggler cuts in line and fills up the bike tank, the smugglers passes along a small payment to the gas attendants.

A barrel of fuel costs around $78 (900,000 Indonesian Rupiah) in Indonesia with the fuel subsidy. In East Timor, the same barrel of fuel costs about $156 (1.8 Million Rupiah).

The smuggling of fuel has impacted Indonesia’s budget. The original budget estimate for the fuel subsidy program was set at 210 Trillion Rupiah. Due to the purchases of smugglers, the fuel subsidy program cost 285 Trillion Rupiah, or $25 Billion.

In addition to the fuel smuggling, a black market in stolen cars is also active on the border with East Timor. A person with experience in the trade told the Jakarta Globe that a stolen 2013 Toyota Avanza Veloz can be sold for $6,525 (75 Million Rupiah) on the border.

Oil company Royal Dutch Shell reported that its earnings for 2013 was almost $1 Billion lower due to oil theft and other acts of sabotage that occurs in Nigeria.

Shell’s Chief Financial Officer stated that nearly $1 Billion worth of oil is stolen from the oil industry each month across Nigeria. In 2011, the Nigerian government lost an estimated $7 Billion in tax revenue due to oil theft. The amount of tax revenue lost was roughly equal to 25 percent of the Nigeria’s national budget for 2013.

In an article in Bloomberg Businessweek, a team of oil thieves stated that they are able to make up to $6,098 (1 Million Nigerian Naira) a day from stealing oil from pipelines.

The thieves steal oil from pipeline managed and operated by multinational oil companies such as Royal Dutch Shell. The oil thieves cut through the pipelines with saws and siphon the oil into barrerls. The oil is then brought to illegal refiners located across Nigeria.

The refining process at these illegal refiners takes about six hours. The crude oil is boiled in a drum, cooled by water, and then stored in another container. The oil is then filtered into gasoline, kerosene and diesel. Any left over unfiltered oil is simply tossed into the water.

An average sized illegal refinery in the Nigerian Delta can make over $1 Million a month refining stolen oil.

According to data released by Mexican state owned oil company Pemex, 2,614 illegal fuel siphons were discovered on their pipes in 2013. The theft from their pipes lead to losses of gasoline, oil, natural gas and petrochemicals.

Back in 2000, the oil company discovered 155 illegal fuel siphons, which means that the rate of fuel theft at Pemex has increased by 1,548 percent in 13 years.

Based on the number of siphons, an attempt to steal oil and fuel from the pipelines took place at a rate of every 14 hours in 2013.

In the border state of Tamaulipas, there were 8 illegal siphons in 2000. In 2013, the company discovered 539 siphons.

In the sate of Veracruz, there were 25 siphons in 2000 and 240 in 2013.

In the state of Jalisco, the siphons increased from 7 in 2000 to 230 in 2013.

In the state of Guanajuato, the siphons went from 13 in 2000 to 165 in 2013.

And in Nuevo Leon, fuel siphons from pipelines went form 1 in 2000 to 140 in 2013.

Security analysts and oil industry officials state that areas where drug trafficking cartels are active see more fuel siphons.

According to the Guatemalan Association of Fuel Retailers, between 300,000 and 350,000 gallons fuel is smuggled into Guatemala from Mexico each day. Based on the current price of $4.20 per gallon, the illegal fuel is worth $1.2 to $1.3 Million per day.

Criminal justice officials in Guatemala report that organized crime groups smuggle the fuel into the country through 8 to 9 points along the 500 mile border with Mexico. With the profits from the illegal fuel sales, the crime syndicates then launder the money into building new gas stations.

Criminal fuel smuggling costs the government of Honduras $230 Million, or 10 percent of its annual fuel imports. Economic and finance officials state that smugglers purchase fuel in Venezuela where it is heavily subsided by the government. The smugglers then transport the fuel illegally into Honduras.